I did a strategic planning session with a client two weeks ago, where we set goals and the tasks necessary to meet those goals for the coming year. Many of the goals revolved around improving processes ( I always talk about ways to improve rather than ways to reduce…Improving sounds much more positive…I guess I am just a cockeyed optimist). I am a big believer in constantly improving an organization and I think I provide the tools and facilitation skills to get it done. However, I also always warn clients to be careful, because, just like in life, every improvement comes with a cost. Some of these costs may be so small that they have no effect on the bottom line. Others may be disastrous. These costs may not all be immediately monetary. In the beginning, they may manifest in new behaviors on the job or in morale changes. Obviously, even these “psychological” changes have a cost.
I have clients that ask me about Six Sigma (six standard deviations from the process mean and the nearest tolerance point), which is a quality standard that seeks to obtain quality products or services that are 99.99966% (which is really 4.5 Sigma, nerd humor, ha ha) defect free. It is an amazingly rigorous standard, and a noble and lofty goal for any organization. However, reaching the standard has some serious costs. An entire industry has developed for Six Sigma consultants and trainers. Training is expensive and implementing the changes is very costly. Even tracking the results is very expensive. For a large organization, this “cost of quality” is probably totally worth it. These standards, if rigidly enforced, may not be the best choice for a small organization. They require too many resources to reach the standard.
Here at Enterprise Development Corporation, we create goals and tasks for the coming year. However, because of our relatively low loan volume, setting a 3.4 defects per million (which equates to Six Sigma standard) is unrealistic. We set goals that try to improve our processes and work diligently to reach those goals. We track our progress and celebrate when mission is accomplished and then continue working the next day to get a little better. We write it down, measure it as best we can and keep moving forward. Like any organization on a tight budget, the cost of quality has to be understood and considered before any major changes are undertaken. I would encourage everyone start setting goals for the coming year. Just make sure they are the right goals that deliver the results you are looking to achieve.